Out-of-Control IT Cloud Spend Mitigation

As companies move to IT Cloud-based computing infrastructure, many are finding that costs far exceed budgeted forecasts.  Such was the case with an organization that recently moved to Cloud-based systems and needed to find ways to reduce and mitigate the unexpected costs. SITUATION OVERVIEW A fast-growing Digital Advertising Firm, which had recently migrated to a cloud-centric compute environment was faced with costs that greatly exceeded forecast. The CIO, CPO and CFO were all under pressure to rein in the overages, enhance transparency and implement governance processes. They were also asked to allocate cloud costs to each business unit, to foster accountability. The company engaged Jamie Martino, a member of the OnDemand Professional Network with Strategic Sourcing / IT Category Expertise and an extensive expense management background, to evaluate the cloud optimization market. Martino was charged to work with IT and Procurement to identify aligned vendor solutions, which could reduce costs by at least 30%. DISCOVERY & EVALUATION During the Discovery Phase, the team learned that there was a robust set of platforms and managed services available in the market, which claimed to far exceed the capabilities of generic tools offered by the cloud compute vendors themselves (AWS, Azure, GCP). Through conversations with reference clients of these firms, the team was able to validate that 30% savings was a realistic goal. They learned that common drivers of overages stem from a lack of visibility and challenges related to aligning the purchase decision for each Instance with the best opportunity available. Cost overages were often due to: Zero Usage InstancesOver Engineered InstancesDecentralized non-strategic ‘buying patterns’Unclear Ownership & Inability to allocate costsLack of Internal Resources... read more

Tom Donatelli Joins OnDemand To Enhance Our Client Service Capabilities And Broaden Our Market Reach

OnDemand Resources, the leading provider of independent project and interim talent in Strategic Procurement, Supply Chain and Operations is delighted to announce the addition of Tom Donatelli, a seasoned senior executive with significant experience driving cost reduction, process efficiency and business effectiveness across Fortune 500 companies as our new Vice President Client Services.  In this role, Tom will work with clients on identifying new opportunities for enhancing their business results and engaging the right talent to achieve exceptional outcomes. Tom’s background includes senior leadership roles in Procurement, Finance, Corporate Real Estate and Consulting at high-performance organizations including Accenture, IBM, Pfizer and Teva.  He designed and implemented the Global Procurement Operations division at Teva and has led procurement teams to deliver significant value at both Pfizer and Teva across dozens of spend categories.  Additionally, Tom has led the Corporate Real Estate functions at both Teva and Pfizer and the Global Facilities and Corporate Security functions at Teva. “I am delighted to join the high performing team at OnDemand.  I got to know OnDemand during the early years of the company as their client while at Pfizer and have continued to engage them with great success throughout my careers at Pfizer and Teva.  Joining OnDemand is a natural extension of my next career step as I strongly believe in the company’s value proposition and am excited to start working with clients to help them get exceptional results.” said Mr. Donatelli. “We are very excited to welcome Tom to our team, to help us accelerate our strong growth which is only possible by continuing to deliver superior work for our clients,” said Jan... read more

Spend Assessment – Critical Step To Success Of Strategic Sourcing Initiative

By Gary Long – Vice President, Client Services Let’s say you’re committed to reducing costs whether it be direct materials or indirect materials and services. Where do you start? This article covers the essential steps for conducting a spend assessment which has a number of key challenges from “dirty data” to stakeholder alignment. Step #1 – Data CollectionA good starting point is understanding exactly what you purchase currently, from whom do you buy it and at what cost; what is commonly referred to as a “spend cube”. This is easier said than done, especially if your company has multiple divisions, multiple systems etc. A typical starting point is collecting an Accounts Payable file or files covering one to two years of purchasing activity. Step #2 – Data Cleansing & NormalizationThe data first needs to be cleansed and normalized (IBM vs International Business Machines vs I.B.M.) before you begin to identify where the opportunities might be. This step is not to be taken lightly as it can be painstaking work. Hopefully you have a tool that can help with this, or you may utilize a third-party who has an intelligent tool (helps with categorization) and may choose to do the work somewhere where labor rates are not as expensive (e.g. India, Eastern Europe). Step #3 – Data MiningOnce the spend cube is developed, then what? You need to search for potential opportunities. Look for evidence that spend is fragmented across a given category or categories of spend. If your company is buying laptops, whether with the same specifications or different, from five different suppliers, at different pricing levels, that would... read more

Behind-the-scenes Procurement Support Helps To Deliver Savings On Non-addressable Spend

Procurement’s lead involvement in addressable spend is readily understood. Less frequent is its involvement in spend area defined as non-addressable spend – often a strategic supplier with a long term contract that is not coming up for a renewal and/or high switching cost. A global food manufacturer relied on Emon Sobhan, a current OnDemand Professional Network member to help them find ways to deliver significant savings in an area that was not an obvious focus. SITUATION OVERVIEW The F500 company was embarking on an aggressive multi-year cost savings effort that trickled down to the IT Department.  They subscribed to a zero-based budgeting process and their approved budget was already lean for the year.  Nevertheless, IT was tasked with finding an incremental $8 million in savings from their budgets and had to do it without cutting any projects.  Based on identifying addressable spend, it was clear the $8M savings target was far from reach.  The largest spend areas for IT were in the un-addressable spend category.  These were spend areas considered “off limits” due to various reasons including contract terms and/or high switching costs. APPROACH Emon had a creative idea to find the $8M cost reduction in an area no one was looking because this spend was considered “un-addressable”.   The spend was currently under contract not due to expire for over 2 years and with extremely high switching costs.   Moving away from this supplier would be a massive multi-year undertaking that would be riddled with risk.   THE TWIST The $8M cost reduction ask represented a whopping ~25% of the supplier’s annual contract spend so Emon knew the ask would not... read more

CPO Corner – Is Procurement Getting Better, Or Just Older???

By Steve Miller – https://www.linkedin.com/in/stevemiller-coo/ Mike Nolan of SourceSuite.com noted that “the first traces of procurement can be seen throughout ancient history, including the Egyptians in 3,000 BC.”1 Jose Ignacio Lopez de Arriortua made a company’s lead procurement role both famous and infamous over 30 years ago by first helping GM to “save billions of dollars” and then being “charged [by GM] that he had absconded with 20 boxes of top-secret documents.”2 Is it surprising, then, that after thousands of years of practice and 30+ years of high visibility that most CEOs and CFOs up until 2020 believed their procurement functions were either world class, or at least adequate, for the business challenges they might face? These executives learned from 2020 to 2023 what many top procurement experts already knew: you can find stars and strategic executives in procurement, but overall, it is a function very early in its transformation toward functional excellence. Most business executives don’t understand what excellent procurement looks like. As an example, a Fortune 100 CEO in 2019 said this about the value of having a head of procurement: “if we can buy things like pencils for a cheaper price, then why not?” It probably is not a surprise that in 2020 this company saw its direct operating and SG&A costs increase over $400 million, almost all of which dropped to the bottom line in terms of reduced operating income. Kearney’s 2022 Assessment of Excellence in Procurement study found that leaders, compared with their industry peers, generate nearly 2x more total shareholder return, rebounded 3x stronger through COVID, and contributed 200 basis points more to... read more

Experienced Procurement and Supply Chain Consultant Joins OnDemand Resources To Enhance Client Service Capabilities

March 29, 2023 OnDemand Resources, the leading provider of independent project and interim talent in Strategic Procurement, Supply Chain and Operations is delighted to announce the addition of Gary Long, a seasoned consultant with significant experience supporting clients in their efforts to achieve exceptional results as they pursue cost reduction and efficiency improvement initiatives to the team. Mr. Long brings to OnDemand over three decades of Procurement & Supply Chain experience across both industry and management consulting.  His industry experience includes Pepperidge Farm, Sealed Air Corporation and Teva Pharmaceuticals.  His consulting experience includes senior positions with Kearney, Accenture, FTI and others.  He has supported clients in the areas of Sourcing & Procurement, Supply Chain Strategy, Logistics and S&OP.  He has successfully combined his hands-on experience in industry with leveraging  leading practices gained from 20+ years of management consulting experience across a broad array of industries including but not limited to CPG, Diversified Industrials, and Pharmaceuticals. “I am delighted to join the high performing team at OnDemand.  I had the pleasure to get to know Jan and his team over the years, both as their client as well as a consultant in their network and was always impressed with their ability to serve their clients with exceptional independent talent to get results.” said Gary Long. “We are pleased to welcome Gary to our team, to help us accelerate our strong growth which is only possible by continuing to deliver superior work for our clients,” said Jan Malasek, OnDemand’s CEO.  “Gary’s great client management and engagement skills will ensure that our existing and new clients will get the support needed to achieve... read more